United Oil & Gas PLC (AIM:UOG) shares fell almost 40% after being served a default notice for $3.8 million.
It came from Kuwait Energy Egypt Limited for unpaid cash calls related to the Abu Sennan concession in Egypt, with a 30-day period to remedy the default starting January 28.
According to a press release issued via the London Stock Exchange, United was in negotiations to sell its 22% stake in Abu Sennan to United Energy Egypt Limited. However, these talks failed due to disagreements over the sale and purchase agreement.
United said it is now exploring various options, including legal consultation and ongoing discussions with stakeholders, to address the default notice, while also dealing with the challenges of repatriating funds from Egypt and managing a receivables balance and cash reserves.
CEO Brian Larkin said: "We are very disappointed that we could not reach agreement with United Energy Egypt Limited to sell the Abu Sennan concession.
"We had worked tirelessly from early December and over the holiday period to finalise the sale and purchase agreement ("SPA") and engaged external lawyers to assist through the whole process at a significant cost.
"We had agreed the commercial terms, however, based on external legal advice, we were unable to sign the SPA in the form that United Energy Egypt Limited presented to us. However, we believe the differences could have been easily resolved and this commercial issue avoided."
At 9.05 am, the shares were changing hands for 0.33p, down 0.19p.